Non-Profit Organizations (NPO) have inherited a series of complex GST/HST rules both for claiming GST/HST rebates and reporting GST/HST rebates when it comes to expenses incurred in different provinces.
These rules will impact the sales tax automation on expense reports. In this blog we explain why a Quebec CEGEP can claim 67% of the GST paid in Quebec but 26% of the HST paid on expenses while attending a conference in Ontario and 22% of the HST paid for attending athletic activities in New Brunswick.
For expenses (input) in connection to exempt supplies (output), those not incurred in the course of commercial activities, NPOs are entitled to claim various different rebate rates for the GST/the federal component of the HST and, for the provincial portion of the HST also called the Provincial Value Added Tax (PVAT).
HST Breakdown
| Participating Province | Federal Component of the HST | Provincial Component of the HST (PVAT) | HST |
|---|---|---|---|
| Ontario | 5% | 8% | 13% |
| New Brunswick | 5% | 10% | 15% |
| Nova Scotia | 5% | 10% | 15% |
| Prince-Edward Island | 5% | 10% | 15% |
| Newfoundland and Labrador | 5% | 10% | 15% |
GST Public Service Body Rebate Rates
| Public Service Body activity type | GST and the federal component of the HST |
|---|---|
| Municipalities | 100% |
| Universities & Public Colleges | 67% |
| School Authorities | 68% |
| Hospital Authority | 83% |
| Facility operator/external supplier | 83% |
| Charities and Qualifying NPO’s | 50% |
Rebate rates for the provincial component of the HST, should the PSB have a permanent establishment in a province
| Public Service Body Rebate activity type | Provincial component of the HST | ||||
|---|---|---|---|---|---|
| ON | NB | NS | PEI | NFL | |
| Municipalities | 78% | 57.14% | 57.14% | 0% | 57.14% |
| Universities & Public Colleges | 78% | 0% | 67% | 0% | 0% |
| School Authorities | 93% | 0% | 68% | 0% | 0% |
| Hospital Authority | 87% | 0% | 83% | 0% | 0% |
| Facility operator/external supplier | 87% | 50% | 50% | 0% | 0% |
| Charities and Qualifying NPO’s | 82% | 50% | 50% | 50% | 50% |
So, lets take an example of a public college with a permanent establishment in Québec and where the staff travel regularly to New Brunswick for athletic activities, and to Ontario to attend conferences. Their PVAT rebate rate entitlement would be nil.
CEGEP with permanent establishment only in Québec:
| Public Service Body activity type | Federal component of the HST | PVAT Component | |
|---|---|---|---|
| ON | NB | ||
| Universities & Public Colleges | 67% | 0% | 0% |
The proportion of the HST paid per province that is recoverable is as follows:
| Example | Expenses in | |
|---|---|---|
| Quebec College | ON | NB |
| GST/HST Rate | 13% | 15% |
| Rebate on the 5% federal component | 67% | 67% |
| Rebate on the PVAT component (8% or 10%) | 0% | 0% |
| Rebate on the HST paid | 26% | 22% |
So, in this instance based on the HST paid and where the HST was paid, the proportion of the HST to recover differs from 26% in Ontario and 22% in New Brunswick. For the GST paid in Quebec, it is subject to a recovery of 67%.
As for the QST paid these are the rebate rates available.
| Public Service Body Rebate activity type | QST |
|---|---|
| Municipalities | 50% |
| Universities & Public Colleges | 47% |
| School Authorities | 47% |
| Hospital Authority | 51.5% |
| Facility operator/external supplier | 51.5% |
| Charities and Qualifying NPO’s | 50% |
The CEGEP is entitled to a 47% QST rebate.
Reporting Rules
Contrary to expenses that are incurred in the course of commercial activities where the GST and the HST claimable are blended together for reporting purposes to tax authorities, in the case of rebate claimed by NPOs, above the GST component had to be claimed separately from the PVAT component. So additional information has to be obtained by these NPOs for GST/HST compliance purposes. (See CRA form GST66 entitled “Application for GST/HST Pubic Service Bodies’ Rebate and GST Self-Government Refund”, CRA form RC7066 entitled “Provincial Schedule – GST/HST Public Service Bodies Rebate”, Revenu Quebec form FP-2066 entitled « GST/HST & QST Public Service Bodies Rebate Application” & Revenu Quebec form FP66.A Provincial Schedule – GST/HST Public Service Bodies’s Rebate)
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